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Compliance and Fraud Resources

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Orange County Man Sentenced for HELOC Fraud Scheme

By James Comtois

An Orange County man has been sentenced to 11 years in prison for orchestrating two identity theft schemes in which he obtained personal information from hundreds of consumers and used the data in an attempt to fraudulently obtain $1.5 million from home-equity lines of credit and credit card accounts.

According to George S. Cardona, U.S. attorney for the Central District of California, Martin Quoc Pham of Garden Grove, Calif., was sentenced to 132 months in federal prison and ordered to pay $540,000 in restitution.

Pham pleaded guilty in June to a series of felony charges, including aggravated identity theft, related to two fraud schemes. In both schemes, Pham, with the help of co-conspirators, obtained personal identity information to fraudulently access victims' accounts to obtain money and goods.

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Home Staging Company Employs Live-In Caretakers to Protect Homeowners

By James Comtois

With foreclosures and the number of vacant homes on the market for sale on the rise, homeowners are becoming more vulnerable to fraudsters and scam artists. As a means of protecting homeowners from being exploited by fraudsters, a national home staging company is employing live-in caretakers.

According to Showhomes, with 56 franchises in 23 states, the company is seeing dramatic results with its method of employing qualified people as live-in caretakers to keep homes in show condition. The practice, according to the company, prevents squatting or taking possession and mitigates the potential for scams.

Thomas Scott, vice president of operations for Showhomes, says conditions are ripe in the foreclosure and high-end housing market for exploitation, where such a high percentage of vacant homes are lingering on the market for two years or more.

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Voice of the Industry

Mortgage Fraud Trends: Suspicious Activity Up But Fraud Ratios Down

Perspectives by Terry King

Every facet of the mortgage industry has undergone tremors and territorial shifts over the last few years. Mortgage lending fraud and the required Suspicious Activity Reports that often provide the trigger to detection are no exception. As a matter of fact, these two areas appear to contradict each other until you carefully examine the statistics and the actions that generated them.

SARs filed with the Internal Revenue Service are one of the government's primary tools for detecting illegal financial activities, and are required of depository institutions. From July 2003 through June 2004 depository institutions filed 14,484 SARs. For the timeframe July 2007 through June 2008, the filings were more than 62,000. This represents a significant increase of 442% in SARs.

During the same timeframes, however, mortgage loan fraud within Suspicious Activity Reports seemed to take a different direction.

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Legal Corner

By Herman Thordsen

FORECLOSURES ARE STILL CLIMBING AND LAS VEGAS IS TOPS

FACTS

Las Vegas had the highest U.S. foreclosure rate ending Sept. 30, 2009 with cities in California and Florida following in second and third as per RealtyTrac Inc. The sharpest increases in foreclosure activity among the 50 metropolitan areas with the highest rates were in Boise City, Idaho, Salt Lake City and Provo-Orem, Utah. Foreclosure filings more than doubled in all three areas. Guess where the FBI will be looking for its next set of mortgage fraud defendants?

New foreclosure hot spots developed in Chico, Calif., where the foreclosure rate almost doubled, and Reno, Nev., where the rate rose 80% from 2008. Foreclosure rates increased 77% in Prescott, Ariz.; 64%in both Jacksonville, Fla., and Rockford, Ill.; and 41% in Lansing, Mich.

Las Vegas led the nation, with 5.13% of households receiving a foreclosure filing, almost seven times the national average. Merced, Calif., had the nation's second-highest rate, with 3.72% of households receiving a filing. Cape Coral-Fort Myers, Fla., ranked third with filings going to 3.67% of households. Stockton, Calif., was fourth with a rate of 3.53% of households receiving a filing. Modesto, Calif., recorded a rate of 3.39%.

At trio of California cities were sixth through eighth: Riverside-San Bernardino, Bakersfield and Vallejo-Fairfield. Reno was ninth and Port-St. Lucie, Fla., was 10th, with filings climbing 40%. Los Angeles ranked 23rd with 1.58% of households receiving a filing. (azcen.com102809)

MORAL

The more foreclosures in one area, the more law enforcement looks for mortgage fraud in this attorney's opinion. Therefore, it you had stated income loans in these areas or questionable documents to support income I suggest you see your attorney now.